Investors and analysts may be wondering whether the market rally is really over, and whether this signals more trouble ahead for the economy. Well, the Federal Reserve is scheduled to release its next Beige Book report of economic conditions on Wednesday, offering a glimpse of where things stand. The Beige Book report in July suggested that, in some of the 12 Fed districts, the economy appeared to be stabilizing, suggesting that the recession may have reached its bottom, but offering little sign of a recovery. Retail activity remained weak and employment numbers were not good. Yet the minutes of the FOMC August meeting seemed a bit more optimistic about the economy.
In addition to the Beige Book report, the TIPP Economic Optimism Index is scheduled to be released Tuesday, and the University of Michigan Consumer Sentiment Index comes out Friday. So by the end of the week, we could have a good gauge of the mood about the U.S. economy.
Things will be pretty quiet on the earnings front this week as most of the S&P 500 have already reported results this quarter. But it's time for Campbell Soup Co. and National Semiconductor to step into the spotlight.
In its fiscal fourth quarter 2009, Campbell Soup Co. (NYSE: CPB) reached a new distribution agreement and declared a quarterly dividend. Analysts surveyed by Thomson Reuters expected Campbell to report earnings for the three months ending in July that are the same as a year ago, or $0.26 per share. But for the full year, the forecast is for EPS up 3.7% to $2.17. Revenue is expected to have declined 11.2% to $1.5 billion for the quarter and 5.0% to $7.6 billion for the year. The world's biggest soup maker has topped earnings expectations in recent quarters, by as much as 13.7%. The long-term EPS growth forecast is 8.4% and its earnings multiple is 13x. The First Call consensus recommendation is to buy CPB; Morningstar thinks Campbell remains competitive despite economic conditions. At $31.19, shares are 8.4% higher than three months ago (rising above the 200-day moving average in July for the first time this year) but 14.9% lower than a year ago.
National Semiconductor Corp. (NYSE: NSM) is expected to report a significant earnings decline for its fiscal first quarter 2010, during which its saw a new member join its board. Analysts are looking for $0.06 per share, compared to $0.33 per share a year ago, but up from a loss of $0.28 per share in the fourth quarter. First quarter revenue is expected to be down 35.9% from a year ago to $298.5 million. So far, the forecast is for sequential EPS and sales growth in the second quarter. This dividend-paying company has topped expectations in most recent quarters, including a smaller-than-estimated loss in the previous quarter. The long-term EPS growth forecast is 13.0%, which is better than that of competitor Texas Instruments Inc. (NYSE: TXN). iStockAnalyst anticipates an upside surprise from National Semiconductor. Shares have risen 56.1% year to date to $15.72, but that's still 17.0% lower than a year ago.
Iowa-based convenience store operator Casey's General Stores Inc. (NASDAQ: CASY) is expected to post a modest earnings gain this week. Analysts are looking for $0.60 per share for the fiscal first quarter of 2010, compared to $0.57 per share a year ago. But revenue for the three months ending in July is expected to be 24.2% lower, or $1.2 billion. The forecast for the second quarter is for $0.57 per share (+5.3%) on $1.2 billion (-12.1%). Earnings beat estimates in most recent quarters, by as much as eight cents per share. The long-term EPS growth forecast is 11.3% and its earnings multiple is 14x. The consensus recommendation has been to buy CASY for more than 90 days. At $28.32, shares are up 6.9% from three months ago, but they are still 2.5% lower than a year ago.
Analysts expect United Natural Foods Inc. (NASDAQ: UNFI), a Connecticut-based organic foods distributor, to report modest earnings growth as well. For the fiscal fourth quarter 2009, earnings are predicted to be $0.35 per share, up from $0.30 per share in the year-ago period. Revenue for the period ending in July is expected to be down 4.2% to $873.3 million. The full-year forecast is for a profit of $1.37 per share (+17.5%) on sales of $3.5 billion (+3.3%). Earnings met or beat estimates in recent quarters. The long-term EPS growth forecast is 16.3%, which is better than that of competitors Sysco Corp. (NYSE: SYY) and Nash Finch Co. (NASDAQ: NAFC). United Natural's earnings multiple is 18x. The consensus recommendation is to buy UNFI. Shares have been trading hear the 52-week high of $28.70.
Apparel retailers lululemon athletica inc. (NASDAQ: LULU) and Men's Wearhouse Inc. (NYSE: MW) are expected to report earnings declines this week. Pork producer Smithfield Foods Inc. (NYSE: SFD) and fashion retailer Talbots Inc. (NYSE: TLB) are expected to post deeper quarterly losses.
Deere up on Q4 earnings performance
Reid Hoffman: LinkedIn will go public (at some point)
Retailers can't wait for Black Friday, open Thursday
Add your comments